Many analysts expect the beef cattle industry to expand the cowherd in 2025. This won’t be confirmed until the release of the January 2026 Cattle Inventory Report. When herd expansion begins, replacement heifers and bred cows will become increasingly valuable. As one might expect, replacement heifer and bred cow prices are correlated with feeder cattle prices.
Cows that are open but otherwise healthy can enter two marketing channels: cull cow or bred cow markets. In most circumstances, cows leaving a cow-calf operation are sold as open cull cows. However, cyclical cattle inventories and supply dynamics provide scenarios where the value of bred cows dominates the value of open cull cows because of herd expansion.
The orange line in the figure is the price of a Breaking 75-80% cull cow sold in Joplin, MO. Breaker cows correlated approximately to a cow with a body condition score of 7-8. So, a cow that is open but in good condition. The green line in the figure is the price of a cow that is 4-9 months bred and sold in Joplin, MO. The blue line is the price of a bred cow compared to that of a cull cow. A price ratio that is less than one indicates that a cow is worth more as an open cull cow. A price ratio greater than one indicates that bred cow value dominates cull cow value. An increase in the price ratio implies that bred cow prices have increased faster than cull cow prices. This increase in the ratio is a function of where the industry finds itself in the cattle cycle.
USDA’s next cattle on feed report is to be released on Friday, June 21st. This one is coming out against a backdrop of rising fed cattle prices, higher Choice beef cutout values, and beef production that is slightly larger than last year. It’s going to be an interesting report because it should continue to show declining numbers of cattle in feedlots and indicate falling beef supplies in coming months.
Market analysts who publish pre-report estimates generally expect May feedlot placements to be smaller than those last May. The range of estimates runs from placements down 5 percent to up 1 percent (I’m the analyst who is down 5 percent on placements). USDA reports that the number of feeder cattle going through auctions, video and internet sales, and direct sales were down 4.8 percent compared to those last May. The number of feeder cattle in May reported as part of the CME feeder cattle index was down 19.5 percent compared to a year ago. Contrasting those data points, feeder cattle imports from Mexico were about 30,000 head larger than last year.
Feedlot marketings should be about even with a year ago. Daily steer and heifer slaughter during May was 100.4 percent of last May, with the same number of work days in the month. Continued near record dressed weights of those cattle marketed, largely due to longer feeding periods, is adding to beef production.
Combining placements and marketings should leave the number of cattle in feedlots on June 1 about 1.7 percent smaller than last year. June 1 should mark the second straight month of smaller cattle inventories. The number of cattle on feed for longer than 120 days should continue to decline, as well. Shrinking cattle inventories will begin to cut into beef production in coming months limiting the impact of heavier weights on supplies. On balance, fewer cattle on feed will keep pressure on for higher cattle and calf prices.
Supplemental feeding programs are a staple in beef cattle production systems. Something that is a constant battle is making it more economical. One sector of supplemental feeding is the use of byproduct supplemental feeds to achieve a more sustainable, yet economical way of production. Byproduct feeds are used throughout the southeastern US and include a wide variety of products. Availability of specific products is based on location. In the Southeast, some commonly used supplements include products from the processing of cotton, peanuts, soybeans, corn, ethanol and beer.
We surveyed beef cattle producers across the southeastern states including Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Oklahoma, Tennessee, Texas and Virginia. The survey received 142 responses. Of those responses, 99 indicated use of some type of supplementation for their grazing cattle. Furthermore, 50% of respondents who used supplementation were using byproduct feeds for supplementation while the other 50% were using commodity feeds for supplementation. The results indicated that producers use a variety of different products based on availability, storage facilities and time of year. The most common products used in the southeastern US are whole cottonseed, corn gluten feed, soybean hulls, dried distillers grain, cotton gin byproduct, and peanut hulls (Figure 1).
Cost is often a key difference between byproduct feed supplementation and commodity feed supplementation. Prices vary throughout the year depending on what products are being produced during that time. Current prices can be found on the USDA’s Agricultural Marketing Service’s National Grain and Oilseed Processor Feedstuff Reports. Considering the energy and protein concentration is important. Knowing what your herd needs and finding a product that fits those needs will lead to the best results.
The use of byproduct feeds for cattle is a promising way to promote both sustainability and economic gain in beef cattle production. By understanding the nutritional needs of your herd and the cost differences between products, producers can make decisions to benefit their operations. Our next step in this research is to analyze fertilizer value of feeding byproduct supplements to cattle on pasture.
Figure 1: Survey Results of Byproduct Feed Use by Southeastern Producers
In 2023, food scientists from Auburn University’s Poultry Science Department conducted a survey to ascertain the perception of poultry processing, specifically stunning processes, among American chicken consumers (“Consumer Perception Survey of Animal Welfare in Broiler Stunning.”, Linda Barahona; Sungeun Cho, Ph.D.) The full survey data are currently being evaluated, but some preliminary findings are especially intriguing on the economic front.
The following two survey questions were of specific economic interest: A. “Humanely processed (chicken) are animal derived products from animals that have been treated ethically. Are you willing to pay more for humanely processed(chicken)?” – to which respondents could answer Yes, No or Maybe. The next question related to the previous by asking: B. “If the answer to the previous question was ‘Yes’ or ‘Maybe’, how much more are you willing to pay?” Respondents had six choices for B: Less than 10%, 10-50%, 51-100%, 101-200%, 201-300% and Greater than 300%.
Of the 986 respondents, 699 of them (71%) answered Yes (358) or Maybe (341). Of those 699 Yes/Maybe’s, almost 85% were in the first two categories and willing to pay at least 10% more, with half of those willing to go up to 50% more in price for humanely processed chicken. To put the choice ranges in perspective, at the time of this writing, the average regular pack of boneless/skinless breast in the Southeast U.S. was $3.21 (USDA National Retail Report – Chicken, May 17, 2024.) Using the upper end of the ranges above, the respective increased prices someone might be willing to pay chicken would be: $3.50 (<10%), $4.81 (10-50%), $6.42 (51-100%), $9.63 (101-200%), $12.84 (201-300%), or $14.45 (>300%, estimated at 350% increase). Applying these prices to the results would suggest only 15% of those willing to pay more would accept more than an additional $1.60 ($4.81 compared to $3.21) per package of humanely processedchicken breasts.
While this survey seems to suggest that consumers are indeed willing to pay for chicken that was processed in a perceived more humane fashion, several questions remain. The above prices in dollars were not shared in the survey, those are extrapolations of this author. Further work is planned to evaluate consumer choices with products visually before them with the dollar prices clearly marked, and with one package clearly labeled and understood as “Humanely Processed”. Would the breaking point remain at 50% price increase, or would consumers make different choices with more information? Some of the current survey data suggests increased knowledge of poultry production in general leads to willingness to pay more. Would a clearer understanding of a specific “humane process” in question also impact willingness to pay? All of these are questions being considered for further expanded study.
The results of this work will be important for poultry companies as they consider implementing processes that might be considered more humane, like controlled atmospheric stunning, but can be costly to implement and have increased management requirements. If consumers are willing to pay enough, it might be possible for poultry companies to work with their wholesale and retail customers, like grocery and fast-food businesses, to pass the increased cost of production directly to end consumers.
USDA released their May cattle on feed report on Friday, May 24th. For the first time in 8 months the total number of cattle on feed declined below last year’s level. The 11.5 million cattle on feed were the fewest since September 2023. The number of cattle in feedlots has been pumped up by placing more heifers, some pulling of feeder cattle ahead, and a few more cattle from Mexico compared to the year before.
Due to when holidays fell this Spring and weekends there were 2 fewer slaughter days in March compared to last year and 2 extra days in April. This large swing in days has not happened since the mid-1990s. The 2 extra days in April meant that feedyard marketings were more than 10 percent larger than April last year. Placements were almost 6 percent fewer than last year and were the smallest since 2020.
The combination of large marketings and light placement numbers pulled down cattle on feed below a year ago. There are still more cattle on feed for more than 90 days and 120 days than a year ago so that should keep dressed weights high.
The wholesale beef market, as measured by the Choice beef cutout, has jumped more than $16 per cwt in the last 2 weeks. Remember that the cattle on feed report is a little bit backward looking. It contains marketings and placements in April and the number of cattle on feed on May 1. In the ensuing couple of weeks prices have jumped higher. Whether that increase reflects some packer cut back in processing to try to boost prices, some Memorial Day summer bump in buying, or fewer cattle on feed, or a combination of all three (most likely) the end result is higher wholesale beef prices. Fed cattle prices are increasing also. Fewer cattle on feed promises to cut beef supplies that have actually been larger than last year over the last 8 weeks. Tighter supplies will work to boost prices for calves, feeders, and feds.
